Item 1.01.
Entry into a Material Definitive Agreement.
Agreement
and Plan of Merger
On April 28, 2020, resTORbio, Inc., a Delaware corporation (resTORbio), entered into an Agreement and Plan
of Merger (the Merger Agreement) among resTORbio, Adicet Bio, Inc., a Delaware corporation (Adicet), and Project Oasis Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of resTORbio
(Merger Sub), pursuant to which, and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Adicet will be merged with and into Merger Sub (the Merger) at the effective time
of the Merger (the Effective Time), with Adicet continuing after the Merger as the surviving company and a wholly-owned subsidiary of resTORbio. The Merger is intended to qualify as a
tax-free reorganization for U.S. federal income tax purposes.
At the Effective Time, each outstanding share of
Adicet capital stock will be converted into the right to receive shares of resTORbio common stock, par value $0.0001 (the resTORbio Common Stock), as set forth in the Merger Agreement. Under the exchange ratio formula in the
Merger Agreement, immediately following the Effective Time, the former Adicet securityholders are expected to own approximately 75% of the outstanding shares of resTORbio Common Stock on a fully-diluted basis and securityholders of resTORbio as of
immediately prior to the Effective Time are expected to own approximately 25% of the outstanding shares of resTORbio Common Stock on a fully-diluted basis (in each case excluding equity incentives available for grant). In addition, as more fully
described below, each holder of resTORbio Common Stock as of immediately prior to the Effective Time shall be entitled to one contractual contingent value right issued by resTORbio, subject to and in accordance with the terms and conditions of the
CVR Agreement (as defined below), for each share of resTORbio Common Stock held by such holder. In connection with the Merger, resTORbio will assume certain outstanding Adicet options and warrants, subject to appropriate adjustment of the number and
type of underlying shares and exercise price based on the exchange ratio formula in the Merger Agreement.
The Merger Agreement contains a customary no-shop provision under which neither resTORbio nor Adicet is permitted to (i) solicit any alternative acquisition proposals, (ii) furnish any non-public
information to any person in connection with or in response to any alternative acquisition proposal, (iii) engage in any negotiations or discussions with any person with respect to any alternative acquisition proposal, (iv) approve,
endorse or recommend any alternative acquisition proposal, (v) enter into any agreement relating to any alternative acquisition proposal, (vi) take any action that could reasonably be expected to lead to an alternative acquisition
proposal, or (vii) publicly propose to do any of the foregoing. The no-shop provision is subject to certain exceptions that permit the board of directors of resTORbio, Inc. (the
resTORbio Board), or the board of directors of Adicet, to comply with its respective fiduciary duties, which, under certain circumstances, would enable resTORbio or Adicet, as applicable, to provide information to, and enter into
discussions or negotiations with, third parties in response to any alternative acquisition proposals.
The Merger Agreement contains customary
representations, warranties and covenants made by Adicet and resTORbio, including covenants relating to obtaining the requisite approvals of the stockholders of Adicet and resTORbio, indemnification of directors and officers, and Adicets and
resTORbios conduct of their respective businesses between the date of signing the Merger Agreement and the Effective Time.
The Merger Agreement
provides each of resTORbio and Adicet with specified termination rights, and further provides that, upon termination of the Merger Agreement under specified circumstances, either party may be required to pay the other party a termination fee of
$6,100,000. In addition, in connection with certain terminations of the Merger Agreement, either party may be required to pay the other partys out-of-pocket fees
and expenses up to $1,000,000.
The Merger Agreement provides that, immediately following the Effective Time, the board of directors of the combined
company will consist of seven directors, comprised of five directors designated by Adicet, one director designated by resTORbio and the Chief Executive Officer of resTORbio (until each of their respective successors are duly elected or appointed and
qualified or their earlier death, resignation or removal). In connection with the Merger, resTORbio will seek to amend its certificate of incorporation to: (i) effect a reverse split of resTORbio Common Stock at a ratio to be determined by
resTORbio and Adicet and (ii) change the name of resTORbio to Adicet Bio, Inc..